You have been assigned analysis of a project that has a total of $500,000 in Net Investment. You have decided that you will start by issuing shares of common stock at a price of $60 per share. The shares will carry a beta of 1.2. The current risk-free rate is 3%, and the expected return on the market is 12%.

For the remainder, you plan to either borrow it via a bank loan or via the coupon bond market. The bank loan would carry an interest rate of 5%, while the coupon bonds would carry a rate of 8%. However, you can only borrow $200,000 of bank debt, while you could borrow $400,000 of coupon bonds. The tax rate is 21%

a. Which option is the better of the two below... show by calculating the respective WACC: (15 pts) Option A: $200,000 of Bank Debt; $300,000 of common stock: WACC = _________

Option B: $400,000 of Coupon Bond Debt; $100,000 of common stock: WACC = _________

b. The project has expected NCFs of $50,000 during each of the 20 years of life. Given this, and using the better of the two financing options from (a), what is the NPV of the project?